More than 360,000 fake computer chips and network components seized in first-ever intellectual property rights (IPR) joint enforcement operation by the US Customs and Border Protection and the European Union.

It’s one thing to unknowingly buy a fake Gucci handbag and lose a few hundred bucks. But it’s quite another to purchase counterfeit integrated circuits (ICs) – used in computers, aircraft, cars and telecommunications – and risk potential national security and health and safety consequences.

That possibility was brought to the fore in the recent joint announcement by U.S. Customs and Border Protection (CBP) Assistant Commissioner for the Office of International Trade Dan Baldwin and Director-General Robert Verrue, European Commission Tax and Customs Directorate, in which they revealed the results of Operation INFRASTRUCTURE.

Carried out in November and December 2007, Operation INFRASTRUCTURE took place in several German airports, including Frankfurt and Leipzig, in France’s Roissy-Charles de Gaulle airport, and in Britain’s Heathrow, as well as a number of hubs in the US. The operation resulted in the seizure of over 360,000 counterfeit integrated circuits and computer network components bearing over 40 different trademarks – including Intel, Cisco and Philips – worth more than $1.3 billion. These products were selected for the joint operation because they present safety and security risks in addition to infringing IPRs.

After the seizure, senior US and EU officials vowed to crack down on the counterfeiting of computer components by working with importers to see how the fakes entered their markets, launching criminal investigations, and taking up the matter with China, where most of the counterfeits originated. It was not clear if the importers knew they were trading in counterfeit products.

The counterfeiting of networking hardware and integrated circuits has more serious implications than that of regular goods. Computer networking hardware is the infrastructure of modern business, healthcare, education, and communication and information networks. Counterfeit hardware lacks the quality assurance and manufacturing standards of genuine hardware and therefore has a much higher failure rate – both during and after installation – imposing significant labor, equipment and lost productivity costs on individuals and organizations that depend on these networks. ICs are used in a wide range of applications, including automobiles, aircraft, computers, telecommunications, medical devices, and consumer electronics. IC counterfeiting not only damages the brand reputation of the rights holders when the final product fails or does not perform to expectations, but it also presents health, safety and security risks.

In touting the success of Operation INFRASTRUCTURE, CBP Assistant Commissioner Baldwin said that it “clearly demonstrates our commitment to jointly working with our European counterparts to stop the international flow of illicit goods, and protect our consumers and businesses from these harmful products.” He added, “It is important to also recognize that there is a vitally important but discreet role that these components play in the everyday infrastructure of our societies. We therefore need to be able to rely on systems that are supported by them across various sectors, particularly as it relates to national security.”

For his part, Mr. Verrue stated, “We will continue to build upon this operation, and a growing cooperation with our U.S. colleagues, to combat the global trade in fake goods. The U.S. and EU are fully committed to effectively combating counterfeiting and piracy at home and abroad. In addition, this also shows that Customs administrations are prepared to tackle difficult enforcement challenges and issues, especially when the health and safety of our citizens is at stake.”

Operation INFRASTRUCTURE was the first joint Intellectual Property Rights (IPR) enforcement operation undertaken by CBP and the European Union. At their 2006 Summit, the European Union (EU) and the United States committed to implementing the “EU-US Action Strategy for the Enforcement of Intellectual Property Rights (IPR).”